Wednesday saw a lackluster day with the indexes basically ending up where they started. Volume on Wednesday was low at 2.8 billion shares but it was typical for the day before the Thanksgiving holiday.
The main event on Wednesday was the pullback in oil and a pick up in Russian bombing activity in Syria along with the announcement of surface to air misses being brought in to “guard” Soviet aircraft. The Russian Defense Ministry also announced all bombing runs would have jet fighter support.
Advance Decline Numbers
While volume was low on Wednesday, new highs rose to 74 and new lows fell to 43. On the NASDAQ new highs were 81 and new lows 38. While we cannot read much into these numbers due to holiday on Thursday and lack of volume on Wednesday, the advance decline numbers should be interesting to see on Friday.
Market Direction Technical Indicators At The Close of Nov 25 2015
SPX Market Direction Technical Analysis for Nov 25 2015
Stock Chart Comments:
The S&P close on wWednesday as virtually unchanged from Tuesday. The S&P closed above all three major moving averages and the 20 day simple moving average (SMA).
The 100 day moving average is still ready to move above the 200 day but again on Wednesday there was not enough strength to push it above the 200 day. Meanwhile the 50 day moving average despite turning up, has a long way to go before regaining the lead in market direction.
The Lower Bollinger Band is still moving above the 50 day moving average and is nearing the 100 and 200 day moving average which is a bearish signal. At the same time the Bollinger Bands look like they are starting to form a Bollinger Bands Squeeze.
The closing candlestick on wWednesday as again bearish. However with such low volume I would not read much into the closing candlestick from Wednesday.
Support and Resistance Levels:
These are the present support and resistance levels.
2100 was light support. Stocks have been unable to stay above this level and push higher on numerous occasions. It remains resistance.
2075 is light support. Below that is 2050 which is light support. Stronger support is at 2000 which had repeatedly held the market up throughout each pullback in January and February but failed under the waves of selling in the last correction. Stocks continue to have trouble holding the 2000 level.
Weak support is at 1970 while stronger support is at 1956 and technically it is more important than 1970 for the market. 1940 is light support. 1920 is now light support. 1900 is more symbolic than anything else.
1870 and 1840 are both levels with strong enough support to delay the market falling and should see a sideways action attempt while investors decide whether to sell or buy. So far 1870 has held the market up better than any of the other support levels aside from 2000 which held the market up for months before the collapse in August.
The other two support levels are 1775 and 1750. I have explained that these two are critical support for the present bull market. While 1775 is important it is 1750 that is the bottom line.
A break of 1750 would mark a severe correction of 384.72 points or 18% from the all-time high of 2134.72. This would be the biggest correction since April 2012. A pull-back of that size would definitely stun investors and bring to question whether the bull market is finished.
Momentum: For momentum I use a 10 period when studying market direction. Momentum is back positive and trying to rise.
MACD Histogram: For MACD Histogram, I am using the Fast Points set at 13, Slow Points at 26 and Smoothing at 9. MACD (Moving Averages Convergence / Divergence) issued a sell signal on Friday Nov 10. That sell signal is weakening further on Wednesday and could become a buy signal if stocks move higher on Friday.
Ultimate Oscillator: The Ultimate Oscillator settings are: Period 1 is 5, Period 2 is 10, Period 3 is 15, Factor 1 is 4, Factor 2 is 2 and Factor 3 is 1. These are not the default settings but are the settings I use with the S&P 500 chart set for 1 to 3 months. The Ultimate Oscillator is back positive and falling.
Rate of Change: Rate Of Change is set for a 21 period. The rate of change signal is positive and trying to rise but the move is more sideways than up. No firm signal is being issued by the Rate Of Change.
Slow Stochastic: For the Slow Stochastic I use the K period of 14 and D period of 3. The Slow Stochastic tries to predict the market direction further out than just one day. The Slow Stochastic is signaling up for stocks.
Fast Stochastic: For the Fast Stochastic I use the K period of 20 and D period of 5. These are not default settings but settings I set for the 1 to 3 month S&P 500 chart when it is set for daily. The Fast Stochastic is also signaling higher for stocks but the %K signal line is almost ready to cross below the %D signal line which will give a sell signal.
Market Direction Outlook for Nov 27 2015
Normally volume is very low on the half day over the Friday holiday. Market close at 1:00 PM. I am not expecting much in the way of change on Friday for stocks.
If there was a bias, it would still be higher. The bias from all the technical indicators is that stocks may have room to push higher. If there is a movement on Friday then, I would expect it to be slightly higher but overall I would expect a very slow and flat day on Friday.
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